CHARTWELL TECHNOLOGY INC.
TSX : CWH

CHARTWELL TECHNOLOGY INC.

January 29, 2010 16:30 ET

Chartwell Announces Financial Results for the Three and Twelve Months Ended October 31, 2009

CALGARY, ALBERTA--(Marketwire - Jan. 29, 2010) - Chartwell Technology Inc. (TSX:CWH) ("Chartwell" or the "Company"), a leading provider of gaming software systems and entertainment content to the online and remote gaming industry, announces audited financial results for the year ended October 31, 2009.

Chartwell focused on its core Casino gaming software business in fiscal 2009, continuing to release a large number of new games as well as completing major advancements to its Casino management system's capabilities. This focus on Chartwell's traditional strength is reflected in the launch of the Chartwell Games Platform (CGP), a fully hosted, managed and licensed platform offering Chartwell's Casino gaming system as well as select third party content and brand suppliers. The CGP allows Chartwell to rapidly deploy new customers and a wide variety of new content.

The investments in our gaming system over the past year have produced one of the industry's most flexible software solutions, providing operators with the game content and management tools required to attract and retain players in all currencies and languages and in all of the regulated markets. All of these features are now available from Chartwell's state-of-the-art distribution platform.

As part of Chartwell's commitment to focus on its core gaming system, a decision was made to close the Chartwell Poker community, PokerNexus as of the end of the fiscal year. The Poker community and the previously planned Bingo community operations consumed a significant amount of development and management resources and did not achieve or project the same return on investment that the Company's industry-leading Casino product presents. All of the Company's resources will now be devoted to the advancement of our core Casino games and system.

Three months ended October 31, 2009

Following the closure of PokerNexus, Poker community licensing and services operations have been reported as discontinued operations. Comparable results from 2008 have been restated to conform to this presentation.

Revenue for this year's fourth quarter was $3.5 million compared to $4.6 million for the same period a year earlier. The decline in revenue results from a number of factors including the continued effects of the global recession, increased competition, and the non-renewal of a licensee late in the fourth quarter of 2008.

Net income from continuing operations for the fourth quarter was $196,000 as compared to net income from comparable operations in the prior year of $710,000, with earnings per share of $0.01 as compared to earnings per share of $0.04 in the comparable quarter of 2008. Reduced revenue was offset by generally lower expenses and an income tax recovery as compared to an income tax provision in the previous year.

Software development and support expenses decreased to $1.7 million in the fourth quarter of 2009 from $1.9 million from the fourth quarter of 2008 as increased research and development related tax credits over the same period of last year offset higher salaries as the Company continues to invest in expanding the suite of games and adding to the functionality of the Casino management system. The Company recorded an Investment Tax Credit before related fees of $753,000, accounted for as a reduction in software development and support expense.

Sales and marketing expenses decreased to $399,000 from $584,000 primarily on reduced salary expense and the timing of travel engagements, while general and administrative expenses increased modestly to $782,000 from $691,000. 

Year ended October 31, 2009

Total revenue for the year ended October 31, 2009 decreased 26% to $15.6 million compared to $21.0 in fiscal 2008. The decrease in revenue results from several causes, including the overall reduced revenue that operators have experienced given the poor economic climate, increased competition and the non-renewal of two licensees late in the Company's 2008 fiscal year.

There was a small net loss from continuing operations of $396,000 for fiscal 2009 as compared to net income of $3.6 million in fiscal 2008. The net loss from discontinued operations was $2.3 million in 2009, as compared to a net loss from discontinued operations of $845,000 in fiscal 2008. The overall net loss in the year results from management's decision to continue to aggressively invest in our core Casino software development through this period of economic unrest.

Software development and support expenses increased to $8.8 million from $8.0 million for the same period in fiscal 2008. The increase is due to modestly higher salaries and additional senior management personnel in the product and operations areas. Offsetting these expenses are government assistance in the form of Scientific Research and Experimental Development Investment Tax Credits totalling $753,000 recorded in the year.

Sales and marketing expenses were comparable between years at $2.0 million in both fiscal 2009 and 2008. General and administrative expenses increased to $3.4 million from $3.2 million on generally higher salary expense.

Mr. Alan Richter, CFO of Chartwell comments on the fiscal 2009 results, "Most companies globally had their challenges throughout 2009 dealing with the severe economic downturn and Chartwell was not insulated from the ensuing recession. Our management team had to make some very difficult decisions to navigate through this time, but moves were made to refocus the Company on our core business in order to regain growth and profitability for 2010. I am encouraged with these decisions and believe that our business has stabilized." Mr. Richter adds, "Looking forward I am confident that the refocus of the Company and the launch of our new Chartwell Games Platform, loaded with proprietary and third party content will have a positive impact for new business in our key markets and new markets for 2010".

Balance sheet strength

The Company continued to maintain a strong balance sheet. At October 31, 2009 Chartwell had $19.1 million of cash and short term investments and positive working capital of $21.7 million with virtually no debt.

About Chartwell

Chartwell specializes in the development of leading-edge gaming systems and content for the regulated online gaming industry. Chartwell is certified or licensed in all of the leading regulated gaming markets and provides its full service capabilities in all regulated markets. Chartwell does not participate in the online gaming business for its own account. Chartwell's team of highly trained professionals is committed to delivering the highest quality software and maintaining its leading edge through continuous development and unparalleled customer support.

Chartwell invites you to preview our company and gaming applications at www.chartwelltechnology.com

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein may constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. We believe that the expectations reflected in the forward-looking statements are reasonable based upon management's current views but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date hereof. We do not intend, and do not assume any obligation, to update conclusions, forecasts or projections that may be contained in these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. No assurance can be given that actual results, performance or achievement expressed in, or implied by these forward-looking statements will occur, or if they do, that any benefits may be derived from them. Past results and information provided by third party sources considered to be accurate have been applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information. With respect to the anticipated future deployment of new customers and new content, the continuing suitability of Alderney as a licensing jurisdiction from which to operate the Chartwell Games Platform has been assumed. With respect to the focus of our resources on our core gaming system, we have assumed that demand for the core gaming system will continue to exceed demand for our other products or services.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of factors that may include, but are not limited to: financial market uncertainty, the impact of government regulation and laws affecting international operations, the impact of price competition, loss of business or credit risks associated with current and prospective major customers, general industry conditions and growth rates, currency rate fluctuations, the impact of consolidations in the online gaming industry and other risks and assumptions detailed from time to time in Chartwell's Annual Information Form and Management's Discussion and Analysis, both of which may be found at www.sedar.com

The TSX does not accept responsibility for the adequacy or accuracy of this release.

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